The Complete Guide to Restaurant Inventory & COGS Management in 2026

Food wastage is the single largest silent profit killer in Indian commercial kitchens. Implementing daily stock audit protocols can boost net profit margins by up to 8% without changing your menu prices.

1. The Cost of Goods Sold (COGS) Formula

To accurately calculate your COGS percentage every week, use the standard restaurant formula below:

COGS % = ((Beginning Inventory + Purchases) - Ending Inventory) / Total Food Sales * 100

2. Raw Material Yield & Variance Breakdown

Ingredient Category	Ideal Loss %	Maximum Threshold	Audit Frequency
Poultry & Meat	4% - 6%	8%	Daily
Dairy & Cottage Cheese	2% - 3%	4%	Daily
Dry Grocery & Spices	0.5% - 1%	2%	Weekly

3. 3 Golden Rules for Zero-Leakage Inventory

1. FIFO (First In, First Out): Always rotate perishable stocks so older items are consumed first.
2. Automated KOT Printing: Eliminate verbal orders so every single item cooked corresponds to a logged KOT item.
3. Recipe Standardization: Standardize portion sizes using digital kitchen scales to prevent over-portioning.